How Fast Do You Want To Grow?
If you’re a startup, marketing is super important. You’ll typically need to spend more in the beginning just to get some traction and get established at a base level. How else will you get found and attract customers if you have no visibility and no track record? You might want to get some advice from a marketing professional about where it’s most important to spend — whether it’s on branding to create a unique, recognizable identity for your business that’s memorable and attractive, or on search engine optimization to get you found online.
We use the Duct Tape Marketing marketing hourglass to plot our marketing tactics to match what’s most important to accomplish. If your business is new, then the first challenge for a new business to to get your ideal client to KNOW you exist.
If your business is already running you likely already have marketing assets of some kind that you can build on and can work toward other sales goals.
Marketing drives revenue, so you will want to set your marketing budget based on how urgent your need is to grow. Here are the Small Business Administration’s recommendations:
- Established small businesses with revenues less than $5 million should allocate 7% – 8% of gross or projected revenues to marketing.
- Newer companies who have more to work to do to ramp up should spend more — up to 20% of gross or projected revenue.
“This percentage also assumes you have margins in the range of 10% – 12% after expenses, including marketing. If your margins are lower than this, you might consider eating more of the costs of doing business by lowering your overall margins and allocating additional spending to marketing. It’s a tough call, but your marketing budget should never be based on just what’s left over once all your other business expenses are covered.” —SBA